The film is a dramatisation based on a combination of real events, rumours, urban legends, and the imaginings of the scriptwriter – as the film makes clear. In one scene, one-time Buzzcocks member Howard Devoto (played by Martin Hancock) is shown having sex with Wilson's first wife in the toilets of a club; the real Devoto, an extra in the scene, turns to the camera and says, "I definitely don't remember this happening". The fourth wall is frequently broken, with Wilson (who also acts as the narrator) frequently commenting on events directly to camera as they occur, at one point declaring that he is "being postmodern, before it's fashionable". The actors are often intercut with real contemporary concert footage, including the Sex Pistols gig at the Lesser Free Trade Hall.

Wilson founds a record label, Factory Records, and signs Joy Division as the first band; the contract is written in Wilson's blood and gives the Factory artists full control over their music. He hires irascible producer Martin Hannett to record Joy Division, and soon the band and label have a hit record. In 1980, just before Joy Division is to tour the United States, Curtis hangs himself. Joy Division rename themselves New Order and record a hit single, "Blue Monday".

Despite the apparent success, Factory Records is losing money. Every copy of "Blue Monday" sold loses five pence, as the intricately designed packaging by Peter Saville costs more than the single's sale price. Wilson pays for New Order to record a new album in Ibiza, but after two years, they still have not delivered a record. He pays for the Happy Mondays to record their fourth studio album in Barbados, but Ryder spends all the recording money on drugs. When Wilson finally receives the finished album, he finds that Ryder has refused to record vocals, and all the tracks are instrumentals. At the Haçienda, ecstasy use is curbing alcohol sales and attracting gang violence.

The Factory partners try to save the business by selling the label to London Records but when Wilson reveals that the label does not hold binding contracts with any of its artists, the deal falls through. While smoking marijuana on the roof of Haçienda after its closing night, Wilson has a vision of God who assures Wilson he has earned a place in history.